(6) Failure To Carry Out Desired Results Even After Pattern Completion
It is one of the most basic limitations of cup and handle pattern. Technical charts are meant to provide most probable direction of stock move after pattern completion.
Cup with handle pattern is also meant to recover an ongoing uptrend. But, it is not the case always. This chart pattern do carries the risk of getting failed anytime.
Sometimes, it can fail to provide desired results even after pattern completion.
Some of the common signs indicating that cup with handle pattern will either fail or will not carry expected results include absence of volume support during breakout, handle that falls too far into the cup (i.e. into the lower half), & a cup that looks like V-shaped rather than U-shaped.
These types of patterns are a clear indication that the cup pattern will not carry expected results even after pattern completion.
Thus, it will be best strategy to stay away from such patterns.
[Read Also: 10 Day Trading Tips To Trade Cup And Handle Pattern]
Image Source: PsychologyToday, Xinmin, & Investopedia
- Cup & Handle Limitations: PsychologyToday